Making the Switch

For the last few days, I’ve been impatiently waiting for a few checks to arrive. When I get my stimulus check and my travel reimbursement, I’ll be able to make a $1600 credit-card payment. That will also include my $400 in snowflakes. This payment will wipe out Card #1 and pay some on my last lump of debt, all rolled into that one low-interest card. I know that I can’t count my chickens before their hatched. Anything could happen between now and when my checks arrive, but it seems likely that I can mail off those payments.

It also seems very likely that I can pay everything off by October 1, seven months ahead of schedule. At that point, I plan on permanently making the switch from a “revolver” to a “convenience user.” The credit card industry divides people into these two categories. Convenience users, currently 39% of all cardholders, pay their charges off in full each month. Revolvers carry balances and contributed to the 34 billion dollars of profit credit card companies made last year. After all these years of paying interest, fretting about debt, and all the rest, it is going to be glorious to wash my hands of the whole mess and hop over to the “deadbeat” convenience-user category in the eyes of the banks.

While my new budget, snowflaking, and blogging are all helping me to pay off my cards early, there is another life change that is making a huge difference: my upcoming marriage. No, the future husband isn’t paying off my cards, but just being in a two-income household has increased my standard of living. It also means that I only pay $330 a month toward the cell phone and house costs. When I lived in Maryland, I paid $925 a month in rent alone. I had roughly the same salary that I have now, but my budget was much, much tighter.

I’ve been reading Credit Card Nation by Robert D. Manning. It was published in 2000, so his analysis focuses on the changes in credit from the 1960s through the 1990s. On a side note, it’s amazing what eight years will do. Looking back at life before 9/11, the Iraq War, sky-rocketing gas and food prices, I wonder what we all worried about! On the credit front, the past eight years have just amplified the trends Manning was identifying. One trend that has really got me thinking is the “moral divide.”

Manning describes how many stories in the media follow the personal narrative of a single debtor. So, we hear the individual story of one family who foolishly racked up $75,000 in debt. They are at fault for their consumption, have to repent, and redeem themselves through hard work, thrift, and savings. Even if it means well, this kind of narrative places the blame on the individual for his or her foolish choices.  Meanwhile, the vast majority of Americans have seen real wages stagnate and must cope with rising costs, so they use credit to mask their declining standard of living. In some ways, Manning identifies the old American drama.  Rather than examine the serious societal changes that are affecting someone, it is easier to find some personal flaw to explain his or her bad fortune.

Current definitions top the “middle class” at $60,000 per year per household and “the upper middle class” at $80,000 per year per household. Before my marriage, I was squarely in the middle class. On a middle-class salary, where I lived, I could not afford to buy a house, rent took nearly half my take-home income, and there wasn’t much money for extras. All my furniture was second-hand or a gift. Credit cards filled the gap when I needed extra groceries, gas, or any “treats.” Part of my debt comes from my own foolish choices, but part of that comes from forces beyond my control.

Whenever I pat myself on the back for my new-found thrift, hard work, and savings, I need to remember that it’s not all about me. We now live in a country where 60% of Americans are carrying revolving debt. When you add in the people who use payday lending loans and other, even more nefarious forms of credit, I’m sure the number rises. Most people rely on credit because their real wages have been steadily falling. As we all dig our way out of debt, I hope we remember that it is not just our own bad choices, but our country’s bad choices that have landed us in the mess we’re in.

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11 responses to “Making the Switch

  1. 3princessesmomma

    I’m glad you pointed out that a lot of folks debt occurs due to circumstances and not just plain foolishness, although that plays a large part in it for most. For some, debt just ends up being something that racks up interest faster than they can pay it off and what was a $5000 debt at first (before that job loss, or car accident with serious injuries, or the death of a spouse) ends up with a balance of $15,000 and no end in sight to getting it paid off.

  2. I think this is your best post. Finding character flaws hides the real issues. That way we avoid looking in the mirror, or at the system that enables us.

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  4. Great post, just excellent. I think that we also admire the person who pulled him or herself out of $75000 of credit card debt, and look to emulate them, even if that means getting ourselves into the same situation. There might be the tendency to think, well, all I have to do is tighten the belt a little and I’ll be able topay it off, so it doesn’t really matter now if I buy this.

  5. So very, very true! I’m happy to have been a “deadbeat” to my credit card company ever since they gave me the card. I find it scary sometimes to find out just how many people have debt, and the overall lack of concern many have over the debt they’ve got. I know it bugs me incessantly and I want desperately to have no more debt, but for some people it’s just a way of life. I guess I just can’t imagine being so nonchalant about having a few thousand dollars’ worth of debt.

    I also think that there is a personal flaw involved to some degree — specifically denial. When you tell yourself there is no problem, you overlook the problem. By the time you wake up, if you ever do, it’s a lot worse than if you would have just dealt with it in the first place. (I know it happened to me, but thankfully I woke up after a couple months so it was still manageable.)

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